Budget 2018 Highlights

Overview

Following last Monday’s budget speech, The Minister of Finance, Profs. Edward Scicluna announced that our Real GDP growth was 5.5% in 2016 and 6.3% in the first 6 months of 2017. The country had a budget surplus projection of €88 million for 2017, which is expected to be 0.5% of the GDP, and the national debt is expected to drop to 54.93% in 2017.

As at August, inflation stood at 1.2%, and we have less than 2,500 registered as unemployed (employment rate: 4.1%)

The total number of Collective Investment Schemes in Malta increased to 1,414 strengthening the financial services industry.

In addition to the above, we have listed the salient points that may interest you both from a personal and organisational point of view:

New Taxes

  • There will be no new taxes introduced
  • Meanwhile, the Government will be combating fiscal evasion and unfair competition through an increase in penalties

Micro Invest

  • The value of assistance shall be increased from €30,000 to €50,000 for Maltese Enterprises. This assistance will be increased to €70,000 in case of;

a)       Businesses established in Gozo

b)      Female Self-Employed

c)       Businesses in which females have a majority shareholding

Leave & Cost of Living Adjustments

  • Workers will receive an additional day of Leave.
  • The cost of living adjustment shall be that of €1.75 per week.
  • Employees earning a minimum wage will receive a mandatory increase of €3 per week during the second year of employment and €6 per week during the third.

Tax Rates

  • Tax Brackets will not change, however Tax refunds of between €40 and €68 will be issued next year, for all individuals working on a full time or part time basis earning less than €60,000. The highest repayment will be granted to the lowest income earners.

Companies & Employment

  • A refund of 30% of the wage of an employee up to a maximum of €6,000 will be granted to employers engaging employees in Gozo for a contract period spanning over a minimum of 3 years.
  • Gozitan entrepreneurs operating in the tourism industry will be allocated funds to improve their establishments.
  • A system is to be introduced whereby companies which owe and are owed money by the government will be allowed to offset said amounts directly.
  • Assistance to start-ups investing in block chain technology.

VAT

  • VAT thresholds for small undertakings shall be increased from €14,000 to €20,000.
  • Rate of VAT on hiring of bicycles shall be reduced from 18% to 7%. The exemption, by way of a VAT refund, applicable to the acquisition of bicycles shall be extended by another year and is to include companies who acquire bicycles for rental purposes.
  • VAT Grouping in the case of financial services and gaming sectors, whereby the separate legal entities will be considered as one single tax payer.
  • Entities having less than 10 less employees will be able to submit their VAT and Social Security forms online.

The Property Market

  • New Legislation is being proposed to enforce registration of all rental contracts, which may potentially lead to the depositing of rental deposits with the government.
  • Financial assistance of up to €25,000 will be given to cover rehabilitation costs of abandoned private residential property which will be rented out for social housing for a 10 year period.
  • Social Loan programmes will continue to be pushed for those looking to buy a home whilst having financial difficulties.
  • The reduction in stamp duty in respect of property acquired in Gozo and in Urban Conservation Areas will be extended by another year.

First Time and Second Time Buyers

  • First Time buyers will continue to benefit from the First Time Buyers Scheme.
  • A New Scheme will be introduced to support Second Time Buyers who purchase a new home to replace their first one, by way of a reduction of stamp duty, of up to € 3,000. This increases to € 5, 000 where the person has a disability.

Transportation

  • Free One Year Bus Pass for all those aged between 16 and 20
  • Incentives will be introduced to encourage purchasing of bicycles and motorbikes.
  • Free School Transport shall be given to all school children as from next scholastic year.
  • A ‘’Share the Road’’ incentive will be introduced to encourage bicycle users and to create awareness on road safety
  • € 700 million investment to improve Maltese roads over the next 7 years

Energy

  • A new electricity distribution centre will be built at Ricasoli.
  • Electric, Hybrid Similar Vehicles will be exempt from Registration tax.
  • Government to introduce cash for plastic and glass bottles
  • Two new solar farms on reservoir sites managed by Water Services.

Pensions and Social Welfare

  • The tax-exempt pension threshold has been increased from €13,000 to €13,200
  • All pensioners shall receive a €2 weekly increase in their pension.
  • Assistance of up to €10,000 shall be made available to cover expenses relative to adopting children from abroad.

Education

  • MATSEC and SEC exam fees will be halved as from next year, and then removed entirely the year after.
  • Tax exemption via tax credits, for persons who are not yet 40 years of age, who opt to carry out a Master’s degree or Ph.D.

Related Service(s): Tax Vat